3.8 Limitations of markets Flashcards
1
Q
Define positive externality
A
The benefit of an economic transaction for a third party
2
Q
Define negative externality
A
The cost of an economic transaction for a third party
3
Q
Define taxation
A
Government collection of money from individuals and firms
4
Q
Define subsidies
A
A sum of money given by government to firms to encourage production and consumption
5
Q
Define state provision
A
Government intervention in a market to supply a good or service direct to consumers
6
Q
Define legalisation
A
A law created by government to control the way individuals or firms behave
7
Q
Define regulation
A
A rule from the government that firms and/or consumers have to follow
8
Q
Define information provision
A
Government intervention in a market to give knowledge that might change behaviour
